posted
What on Earth could you have against tariffs? They allow a country to make money off foreign economic invaders, keeps jobs inside that country, etc. (means I've run out of things to add to my list). Essentially, it allows a government to favour its own citizens against those of more affluent countries. At least thats the way I see it.
The opposite, of course, is free trade. What's the point of this, exactly? Cause I know it allows a boat load of crummy American T.V. shows to be dumped here, at least.
Posts: 1138 | Registered: Nov 2005
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posted
Company A in country Z produces widgets at $1 each. Company B in your country produces widgets at $2 each. Your country decides that it is best if company B be protected, so they charge $2 for each widget brought into the country.
Problem 1) There is now no inscentive for company B to become more efficient and lower its price.
Problem 2) Company C, also in your company, needs widgets in order to produce Thingies. There cost of widgets is twice that of competitor D in another country, so they can not produce them at the same cost--say company C is at $10 while company D is at $8. Now company C is going broke so the country must put a tariff on Thingies as well.
Problem 3) Company D and Company B in different countries don't like the idea that they are being forced out of your country's market. In retaliation they convince their countries to put tariffs on What-Nots and Do-Hickeys, which your country makes cheaper than theirs. Now your country is locked out of their markets.
Problem 4) The people in my country can survive on a much lower standard of living than people in your tariff'd country. The cost of everything you tariff, which might include foodstuffs, and the cost of everything that uses those things, is higher.
Posts: 11895 | Registered: Apr 2002
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posted
But I'm thinking with tariffs they should have the rate determined, by a fixed start, and then taking into account maybe the currency value of other countries against your own, inflation in your own country, supply and demand in your own country (unless that can only be done speculatively) etc. So private companys wouldn't have any way of just "convincing" their government to compete with tariffs.
I know there's a way they calculate tariffs (at least here). Could you please link me to that if you know of it, or maybe its in Australia but not the USA.
[ March 22, 2006, 08:17 AM: Message edited by: cheiros do ender ]
Posts: 1138 | Registered: Nov 2005
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posted
It doesn't matter how tariffs are calculated, they're pretty much always a bad thing. Part of the problem is people think tariffs are taking something from foreigners, ie nobody, when in reality people in a country using tariffs lose just as much.
A moderately famous economist told a tale about cars. He pointed out there are two ways of making cars -- you take steel, advanced plastics, electronics and such into a factory where workers assemble the components on an assembly line resulting in a car. Or you plant wheat, water and otherwise care for it through the growing season, harvest the wheat, send it off in a big boat to the middle of the pacific, where some mystical automated factory (we'll call it "Japan") turns that wheat into cars and sends them back to the US also on boats.
Any time you raise the tariff, you're benefitting the first car manufacturers at the expense of the second -- they have to raise the price of wheat, some of them go out of business, some have to cut jobs, et cetera.
What's particularly important about this little tale is that it can be proved very easily using basic microeconomics that the benefit to one group because of tariffs is always less than the cost to other groups (no matter what groups we're talking about, assuming externalities are low). Just analyze the producer and consumer surplus changes.
Posts: 15770 | Registered: Dec 2001
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posted
fugu, you seem to be at least a "fair trade" guy, if not free trade. What's your opinion on the "tariffs"/restrictions concerning human labor resources (aka immigrants/foreign workers)?
posted
Reasonable restrictions for security, a large but reachable cap to ensure gradual cultural absorption instead of flooding, strong enforcement of rights regimes on their behalf, consistent efforts to legalize illegals who have managed to survive here for a bit (if you just got here illegally, we'll likely send you back, but if you've been here for a while, you can stay relatively easily).
Posts: 15770 | Registered: Dec 2001
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posted
It's worth noting that, while tariffs are never economically efficient (with a possible exception for developing industries) they can still be justified in some cases by security. For example, the 'two ways to make cars' argument above applies just as well to rifles; but in a war, you really do want to have physical control of your rifle-making plant.
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